When Infrastructures Collide: The Wells Fargo Story

With a three-year integration project involving Wells Fargo and Wachovia nearly complete, Scott Dillon, EVP and head of technology infrastructure services for Wells Fargo & Company, has overseen a technology transition that helped create a financial-services giant among giants. Hereâs what he learned along the way.

In Summary

Who: Scott Dillon, EVP and head of technology infrastructure services for Wells Fargo & Company

What: Dillon has overseen a three-year infrastructure overhaul that brought together the IT operations of banking giants Wells Fargo and Wachovia.

Where: Minneapolis

Why: Dillon's experience winnowing down an inventory of 4,000 applications and managing change across two different organizations offers insight into processes and strategies you can use to shape your own IT infrastructure.

Let's say that you serve as the de facto CIO of one of the top financial-services organizations on the planet, and one morning, you find out that your company is about to get bigger. Much bigger. As in, "via acquisition of the fourth-largest bank in the U.S." bigger. Would your first reaction be a sense of awe--if not a touch of panic? Perhaps at first, admits Scott Dillon, EVP and head of technology infrastructure services for Wells Fargo & Company. But then it's time to get to work.

"It's always scary to go into something like this not knowing what you know now," says Dillon, reflecting on the 2008 announcement of the acquisition by Wells Fargo of Charlotte, N.C.-based Wachovia Bank. "But our leadership put it this way: If we knew what kind of company we were acquiring---and the kind of company we were creating--there would [have been] no trepidation in the beginning at all. Very shortly into the merger and integration process, a clear sense of optimism set in."

With the three-year integration project nearly complete, Dillon has overseen a technology transition that helped create a financial-services giant among giants: San Francisco-based Wells Fargo & Company now operates more than 9,000 stores (mainly bank locations) and 12,000 ATMs. With an estimated 275,000 employees and 70 million customers, it has made the Forbes "Top 20 Biggest Companies in the World" list and ranks 23rd in revenue among all global corporations in all industries, according to Fortune.

For an organization traditionally identified by its stagecoach symbol--recalling its roots when it provided express delivery and banking services in California during the Gold Rush era--the merger underscores a rather literal interpretation of the Wells Fargo motto, "Together we'll go far." Dillon now oversees 4,700 employees. At the start of the acquisition, he and his department were saddled with a combined inventory of 4,000 applications. That number has now been whittled down to 3,500. Throughout it all, IT focused on presenting a uniform "face" for customers.

"We begin and end with customers," says Dillon, who joined Wells Fargo 14 years ago and previously served as CIO/head of enterprise-hosting services for the company's wholesale division. "We're always asking, 'What does the customer expect from Wells Fargo?' From the tech-business side, this means a unified platform. You can't slap new labels on old doors and say, 'Hey, we're different now' and leave it to the customer to make sense of it all."

Dillon spoke from his office in Minneapolis, where, just a few blocks away, the Wells Fargo History Museum showcases a full-scale replica of the iconic stagecoach. He elaborated for CIO Insight's Dennis McCafferty about the merger, addressing key integration details, acquisition-inspired customer innovations and the business strategies behind it all:

CIO INSIGHT: Before we get to the integration, here's something we're curious about: Why don't you work out of the San Francisco headquarters?

SCOTT DILLON: We're a virtual company. Our philosophy is that the best talent is out there in many places. We value and respect where folks are located and want to remain. We also pride ourselves on the diversity of our talent and the many geographic places that it represents.

CIO INSIGHT: OK, then, let's get into the integration details. What was the overarching, big-picture game plan?

DILLON: We take a "one organization" approach here that we call One Wells Fargo. It's the best way to execute flawlessly for the long haul. Both business and tech sought commonly integrated systems. We don't have technology pitted against business and business pitted against technology, as is sometimes the case with other companies.

The merger was announced in October 2008, and the details were finalized in January 2009. We went to work as soon as it was announced. But it wasn't until it was final that we could go full gangbusters. By March, we had our IT teams combined.

We saw this as an opportunity to build the very best tech entity that could exist. I'm proud to say that we literally have a 50/50 split of Wells Fargo and Wachovia legacy talent. That's in all areas, from operations folks to engineers to architects to senior managers. We didn't get there by accident.

In the beginning, we determined what we wanted to look like in five years, specifically to our customers. Then we set targets on solutions that could be brought quickly to market while remaining highly scalable and reliable. We kept our business side closely tied to this, so all of us were involved with the key decisions. We also made sure that we'd only consider an "A" system or a "B" system--those already in place either within Wells Fargo or Wachovia--and not a "C" system. It didn't make sense to build an entirely new way of doing things.

CIO INSIGHT: Did you encounter territorial challenges along the way?

DILLON: Sure. You're always going to see some of that. You hired people who are proud of their work and their systems, after all. They may say: "I built this system and it's worked well for years." Their initial position is one of legacy protection. We made sure we didn't act passively here. We'd bring them in for collaborative discussions in which we talked about business needs. We determined the right direction and then proceeded with a test-and-learn approach, to ensure that anything that disrupted the customer experience could be tracked. We wanted to gather every pre-merger and post-merger survey we could. The best tech decisions were made based on that data. So it became a matter of resolving issues and improving the customer experience rather than protecting legacy systems.

CIO INSIGHT: Did you intend for this effort to take three years?

DILLON: Yes. We have taken a very thoughtful approach. Many other companies try to do integrations in six months. But then you end up just throwing signs up on doors and try to bridge technologies without real integration. We knew we'd need three years to do it right.

CIO INSIGHT: What kind of savings have you seen in the aftermath?

DILLON: We've cut technology costs 20 percent. We concentrated on key, efficient platforms to get us there, and server virtualization efforts. There are also a lot of changes with respect to the impact of the cloud--how it's changing the way business gets done. So you increase efficiencies from both a technology and a people perspective. There is no one metric that helps you achieve these things.

CIO INSIGHT: What have been some of the more significant, customer-facing innovations that have emerged?

DILLON: For our retail customers, it's the ability to use thin-client technology to capture deposits. That's allowed our customers to make deposits without using envelops. It's really state of the art. For our wholesale customers, we offer "CEO MobileSM." In this case, CEO stands for Commercial Electronic Office. With this, customers can monitor accounts and perform time-sensitive treasury management functions through their mobile browsers from wherever they are. It's won a ton of worldwide awards, and 70 percent of our online wholesale customers use it.

Another great differentiator for us is a common- customer platform. This means that whether in-person or at an ATM, the transaction experience is the same anywhere you go in the country. If you're from Florida and you end up at a Texas branch, our systems immediately identify who you are and know your preferences. At other banks that have undergone mergers, you won't have common platforms, systems and interfaces. But this is what we've driven toward all of this time.

CIO INSIGHT: Other than CEO MobileSM, are there additional mobile developments for Wells Fargo?

DILLON: It's a constant area of our customer focus. We have nearly 6 million mobile customers now, and that number is growing. We've launched mobile payments. They can do mobile banking via text, Wellsfargo.com or our apps, which can be accessed by iPhone/iPad, Touch, Android, Palm and BlackBerry. Much of our energy and effort is going into future innovation for mobile. It's here, and our customers expect it from us.

From the enterprise point of view, we're still looking at security and total-cost-of-ownership issues. We need to understand what business problems will be addressed before deployment.

CIO INSIGHT: A common Wells Fargo phrase is "channel ubiquity." How did this play a role in the transition?

DILLON: Channels refer to the various ways customers connect to us--in person, on the phone or at their computers. The computer channels can be handheld devices, laptops or desktops. We need to understand each channel experience. We need to really know our customers so that whichever channel they prefer, they enjoy a unified experience and their needs are met. This involves a commoditization of infrastructure. But we're careful to say that commoditization of infrastructure doesn't mean we make a commodity of IT.

CIO INSIGHT: So what does that mean?

DILLON: It means we simplify infrastructure and keep it in the background. It stays there while we bring in middleware solutions to connect it across the enterprise. Thus, "simple" becomes easy to support. Then you can drive more to the front of the operation and innovate there, as opposed to within your infrastructure. It's a cloud-based approach. It allows us to work more efficiently while building more customer solutions. We need to spend less time on ensuring the reliability and security of the infrastructure and more time on innovating for our customers.